Shares of Indian metal companies rose sharply on July 5 on demand optimism after Reuters reported that China is planning to start a $75 billion infrastructure fund as a means to prop up its economy.
The Chinese economy has been battered in 2022 due to the outbreak of the Omicron variant in the country, which has been exacerbated by the country’s controversial ‘zero COVID’ policy. Rampant lockdowns across major industrial hubs have crippled the Chinese economy and put the country’s target of 5.5 percent growth in 2022 in doubt.
The government recently announced a slew of measures to prop up economic activity with major attention being given to its flagging property and infrastructure sector.
A potential upswing in infrastructure activity in the world’s second largest economy could become a catalyst for a renewed rally in global commodity prices, which have come under pressure in wake of concerns over a global economic slowdown led by the US.
Further, at home domestic commodity producers have come in the firing line of the government’s fight against inflation due to imposition of export duties to curb runaway inflation in basic commodities.
That said, a surge in Chinese demand could be a positive for Indian companies who in recent years have stepped up their exports to the Asian country in wake of local producers in China being shut down due to environmental concerns.
Shares of Hindalco, Vedanta, National Aluminium Company, Tata Steel, Jindal Steel, Steel Authority of India and JSW Steel rose 1-3.5 percent on the National Stock Exchange.
At 11:00 am, the Nifty Metal index was up 1.8 percent at 4,731.7 points. The index has fallen 14 percent in 2022 so far.
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